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May 10, 2021

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Oregon prescription drug price control proposal would put the state out front, as legislatures nationally look to tackle costs

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A bipartisan group of Oregon lawmakers is backing a proposal to tackle unaffordable prescription drug prices that would go further than any other state in the nation.

Several legislatures around the country are considering or have looked into similar proposals to create drug-pricing boards this year, based on a milder version Maryland passed in 2019.

The possibility that the Oregon Legislature could vote on such a plan has attracted national political spending for and against it, most visibly in the form of digital and print ads paid for by the pharmaceutical industry.

Drug pricing control “hasn’t happened at the federal level so states are saying, ‘Let’s do something here, what we can,'” said Sen. Deb Patterson, a first-year Democrat from Salem and one of four sponsors of the bill. “Health care continues to be one of the most expensive parts of people’s budgets.”

Senate Bill 844 would create a state Prescription Drug Affordability Board with the power to set upper limits on how much Oregon buyers would be allowed to pay for particularly high-priced drugs. Payment limits would apply throughout the health care system, from wholesalers and pharmacies to physicians, hospitals and nursing homes, according to another bill sponsor, Rep. Rachel Prusak, a Democrat from West Linn. For patients, the proposal could reduce what they pay for high-priced drugs.

If insurers, pharmacy benefit managers or individuals want to opt out of the payment limit for a drug, the proposal would allow them to do so. Bill language instructs the board to set up “a simple process” to allow opt-outs.

The board would have five members appointed by the governor. Board membership would be limited to Oregon residents with expertise in health care economics or clinical medicine and people with ties to the pharmaceutical industry would be barred from serving. The bill would create a stakeholder council to advise the board, and pharmaceutical industry representatives would be included on the council in addition to representatives of other health care sectors, labor unions, employers and diverse communities.

Lawmakers are scheduled to vote Wednesday afternoon on whether to move the bill out of committee and send it the full Senate for a vote. Democrats hold a supermajority in both chambers of the Oregon Legislature and in recent years Republicans have also enthusiastically helped to pass laws that force drug makers to give advance notice and explain large increases in the prices of medicines. It’s unclear how a proposal to cap price of some high-cost drugs would fare, however.

Both Prusak and Patterson have backgrounds in health care: Prusak is a nurse practitioner and Patterson spent 20 years working for various organizations on health policy, education and advocacy.

Rep. Kim Wallan, a Republican from Medford, is also a chief sponsor on the bill but did not respond to a request for comment. Sen. James Manning Jr., a Eugene Democrat, also signed on as a regular sponsor of the bill. Altogether, it’s a shorter list of sponsors than many bills this session.

Maryland was the first – and so far only – state to pass a comparable version of the pricing board law, although it only covered public employers and the board must get permission from legislative leaders on any payment limit, according to the health news organization Stat. The board’s price control authority takes effect in 2022.

In Maryland, the push to control drug prices got a boost from a billionaire Texas couple, John and Laura Arnold, through their funding of health reform advocacy, Stat reported. The Arnolds are also lending financial support to the Oregon proposal, according to registered lobbyist and former state House speaker Dave Hunt. Hunt represents a coalition of public employee unions, health insurance and health care companies, AARP Oregon and OSPIRG.

Oregon lawmakers’ proposal for the price control board comes three years after legislators passed a landmark drug price transparency law. Prusak said Senate Bill 844 is the logical next step. If the plan passes, “somebody can actually control the cost if the increase isn’t warranted,” Prusak said. “If (drug makers) can present their case that it’s warranted, I can’t imagine there’s a problem.”

Drug price data collected thus far by the state illustrates some of the limits of how much that approach has affected costs.

In 2018, the Legislature passed with strong bipartisan support a law that requires drug companies to report to the state any net annual price increase of 10% for prescription drugs that cost more than $100 a month. There is also a reporting requirement for new drugs that cost more than $670 a month. And under a second drug price reporting law the Legislature passed in 2019, companies must notify the state 60 days in advance if they expect annual price increases of at least 10% or $10,000 for brand name drugs and at least 25% or $300 for generic pharmaceuticals.

Proponents of the 2018 law described it as a first step to understand what drives increases in prescription drug prices. State regulators summed up the first two years of drug pricing data in annual reports which contain some interesting findings. The pharmaceutical industry has sued in federal court to overturn the laws, but in the meantime they remain in effect.

In 2020, “drug manufacturers submitted 70% fewer price increase reports to the state” than in 2019, according to the Department of Consumer and Business Services. “The reasons for this trend are unclear … One explanation suggested by the data is that manufacturers are spreading price increases more widely across their portfolio of drugs to avoid triggering transparency requirements.”

Pharmaceutical makers increased prices in 2020 on drugs that had been profitable in 2019, the state found. There was an average 2019 profit margin of 19% for drugs with 2020 price increases high enough to trigger reporting requirements, according to the state. Six of those drugs had profit margins of more than 80%, “meaning they make 80 cents of pure profit for every dollar of revenue from the drug,” state regulators wrote.

Stories of sudden steep increases in drug prices abound, from when former pharmaceutical CEO Martin Shkreli increased the cost of medicine to treat parasitic infections from $13.50 to $750 a pill, to continued cost increases for the decades old EpiPen and insulin which was discovered a century ago, NPR reported. News also continues to come out about pharmaceutical companies’ role in the nation’s opioid addiction crisis, for example that Purdue Pharma downplayed the addiction risk of OxyContin.

Still, the central role of vaccines in combating the COVID-19 pandemic and the speed at which drug researchers developed the shots has helped to rehabilitate the industry’s image with Americans. A February survey by the Harris Poll found 62% percent of respondents had a favorable view of prescription drug companies, up from 32% in January 2020.

Industry trade group PhRMA highlighted the successful development of vaccines “in record-breaking time” in a statement emailed to The Oregonian/OregonLive. “In the midst of this progress, Oregon legislators are promoting a harmful policy that would threaten the very research and investment needed to get us out of this and future pandemics,” the group’s Director of Public Affairs Jasmine Gossett wrote. She did not directly answer a question about how the Oregon price control proposal would undermine the industry’s ability to conduct research and develop vaccines, particularly given the option for purchasers to opt out of any potential price limits if they felt the need to pay more to support the research.

In ads against the Oregon drug board proposal, PhRMA said that any price limits could lead to some medicines no longer being available to patients in the state. When The Oregonian/OregonLive asked Gossett to explain the claim, she did not cite reasons but instead pointed to a PhRMA ranking of the number of cancer drugs available in nearly two dozen countries that shows the U.S. has speedy access to by far the most of any country, with Germany a distant second.

Prusak said drug companies are implying they would stop selling certain medicines in Oregon if the state started to set payment limits. “Those arguments … are so offensive and ridiculous,” she said. “They continue to sell to countries like Canada and around the world at the same or much less cost. And yet they’re threatening if Oregon and other states were to lower to those costs they wouldn’t sell here. It doesn’t pass the logic test.”

Prusak described PhRMA’s statement that payment caps could undercut vaccine development “fear mongering during the pandemic, during a time that people have lived through a scarcity in vaccines.” She pointed to a February 2020 poll by the Kaiser Family Foundation that found 45% of Americans surveyed said they were “very or somewhat worried” about being able to afford prescription drug costs.

PhRMA targeted Prusak specifically with a Google ad that says, “Tell Rep. Prusak: Vote No – Stop Threatening Access.”

Rep. Rob Nosse, a Democrat from Southeast Portland, said the pharmaceuticals industry targeted him and other lawmakers in a similar way when they were pushing for the 2018 price disclosure law. The Register-Guard reported at the time that the industry paid for “a firm in Virginia to call Oregonians around the state to ask them whether they’re interested in sending a letter to 13 targeted lawmakers, a mix of swing-seat Democrats and moderate Republicans, during the ongoing session.”

“The pharmaceutical industry is powerful,” Nosse said in an interview, although in his experience the approach “doesn’t work. It’s kind of desperate.”

With that said, Nosse said he personally supports Senate Bill 844 but is unsure it will pass this year. “It’s an aggressive bill.”

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